THE BOOK--Playing The Percentages In Baseball

Yes, I read about that (his salary) a while ago and immediately lost whatever respect I had for him and for whomever determines that salary, and that is a gross understatement.

Does baseball even need a comissioner let alone one that makes that much money?  Seriously, that is disgusting.  Given the standard we should set for someone earning that much money and the limited responsibilities he has, the quality of the job he does is equivalent to a 6 year old running a multi-national corporation.

If MLB is the incredibly successful corporation that we think it is, why shouldn’t the top official be paid as other CEOs are? According to a Forbes article from 5/3/2007 titled “CEO compensations”, the top executives of America’s top 500 companies had an average salary of 15.2 million dollars. I can’t imagine the difference between a salary of 3 million or 15 million spread over 30 ownerships makes that much difference to the profit margins of baseball franchises.

As for the job he’s done, I imagine that owners are pretty happy with the commissioner. By best estimates it seems that baseball has only become more profitable under Selig’s commissionership. If they weren’t they’d fire him and find a better one for 14.5 million dollars a year. The Commissioner’s most important job (as far as the owners are concerned) is negotiating the labor agreement. Clearly he’s done something right to keep his job for 15 years.

I’m not at all surprised or disapproving of the salary. In the end, however, this to me is just more proof that MLB owners are as, or more loaded then best estimates show. Which says to me that player’s agents like Scott Boras should be the rule, not the exception. Or perhaps there should be fan bases represented by agents like Scott Boras negotiating ticket and concession prices…

Selig’s salary would put him 127th among all CEOs:
http://www.forbes.com/lists/2007/12/lead_07ceos_CEO-Compensation_CompTotDisp_6.html

The market cap of MLB is roughly 6 billion$.

According to MSN Money, there are 800 publicy listed companies with a market value of at least 7 billion$.

MLB is very much small potatoes, relatively speaking.

Hmmm… make that 13 billion$ valuation for MLB.

http://moneycentral.msn.com/investor/finder/customstocks.asp

That’s 535 stocks ahead of MLB.

The market cap of the 127th stock is 56 billion$.  The salary of the 127th CEO is 14.5 million$. 

If the numbers are linearly proportionate, that’s a 3-4 million$ salary for Selig.

If the salary is proportionate to the square root of the market cap, Selig should get 7 million$.

Without having known the numbers, I would have guessed Selig made like the average MLB player (3 MM).

I don’t see many similarities between running a corporation and “running MLB.” That would be like saying that all the oil companies need an “uber CEO”.  I think that MLB would do just fine without a highly-paid comissioner.

And the idea that a CEO’s salary is a drop in the bucket compared to the value of a corporaton is NOT a good argument for that CEo being worth his salary.

Neither is the fact that MLB has become more profitable under Selig’s reign means that he has done a good job and/or is worth his salary.  I don’t have to explain to this audience why that is so.

I think that Selig is an idiot and idiots do not deserve to be paid 14.5 mil per year for the work that they do.

Oil companies having an uber-CEO would be illegal.  They are supposed to be competing.  Baseball teams compete on the field, but other than that they are franchises of the same company.  The Yankees would not benefit if they drove the other 29 teams out of business the way Exxon would if they were the only oil company left standing.

In a business sense, Baseball’s competitors are football, basketball, hockey, tennis, golf, and soccer.

Whenever I think about these “guys in charge”, I always ask this question:
If this guy were not in charge here, who else would hire him?

A coach like Scotty Bowman would find work somewhere else.  A GM like Lou Lamoriello would find work somewhere else (heck, he could even be a GM in MLB). 

Budd Sseligg?  Gary Bettman?  These guys would not find work in pro sports, except for handouts they’d receive.  The competition for Bettman would come from law firms. 

It’s the basic rule of any compensation package.  You give the guy you want $1 more than the next highest total he can get in the foreseeable future or at least $1 less than the profits he can generate for you.

The only justification for Selig’s salary is that it’s his friends that are approving it.

#7, yes, yes, and yes!  My benchmark, which is essentially the same thing as Tango’s, is what is the minimum you would have to pay someone else to get around the same level of competency.  Surely, it would take a lot less to get someone to run MLB with the same level of competency as Selig.  You DON’T need to be competing with other large corporations and if you do, you can find someone a lot more qualified than Selig. Seriosuly, can you imagine doing a search for a 15 million dollar CEO and Selig coming out on top?  This is the guy who called the All-Star Game a tie and then thought it was a brilliant idea to make the winner have the HFA in the WS (shich means almost nothing, BTW). This is the guy that loves inter-league play and thinks that players should be compelled to tell us whether they have used PED’s or not.

I don’t know for sure, but I would guess that a good CEO of a small corporation that might be making 1 mil or less would do a better job than Bud.  He makes as much as he does because he is a crony and because MLB is making so much money (presumably) that he gives the illusion (to the other not-so-bright owners) that he is doing a good job.  There ain’t a whole lot that the commisioner has to do for MLB to operate just fine.  I mean, seriously, what important responsibilities does this guy have and what important decisions does he have to make?  I imagine that he has little or nothing to do with negotiating the CBA.  The lawyers and much smarter people than he handle that.  The CEO of a typical corporation, while he obviously has many people to assist him, handles EVERYTHING about that corporation.  The CEO’s of the teams handle almst everything in MLB.  The commisioner is almost like a titular head of state.  To say that he is overcompensated is a gross understatement in my opinion.

The answer to what Selig would be doing if he were not commissioner is he’d be the owner of the Milwaukee Brewers, but people in those jobs are pretty quiet about how much they make.

I don’t see what the case is for Selig being incompetent.  Has interleague play hurt the sport, especially as far as attendance?  The allstar game was terrible, but he was put in an impossible position, the managers had burned through both pitching staffs leaving only Garcia and Padilla.

The point is whether he is incompetent for a person that gets paid 15 mil a year.  That is a high bar.  I expect someone that makes 15 mil a year to be brilliant - one of the best business minds in the country.  Is it even possible that Selig is at that level?  I don’t know for sure, but I don’t think so.  If I knew what Selig has done wrong or right I would be worth 15 mil a year myself in terms of running a company - and I’m not - not even close.  Maybe 1500 a year.

I’m not at that level either - or anywhere close to it.  But it seems that the 30 owners - people who have done enough smart things to make hundreds of millions or billions to get to that level (not counting those who inherited it) think that Bud is worth their money.

It feels weird defending Bud here - I have not often been much of a supporter for him - but I think his case to make that cash may be greater than for a lot of fortune 500 companies.  You often find CEO’s there failing miserably and walking away with 100’s of millions, the Home Depot guy comes to mind.  It seems to me that some of them take advantage of diverse and numerous owners in a publicly traded company, and having so many owners makes it harder to hold the manager accountable.

In MLB, if Selig was a waste of money, I think a small group of 30 owners would quickly hold him accountable.  He not necessarily be the smartest man for the job, but he’s smart enough and may be in a unique position of being able to fill a leading role for people who are essentially his bosses, because he is a former owner.  This may be something that an outsider, no matter how smart, may not be in position to do.

When it comes to baseball, rationality goes out the same window that the extra 50 million$ goes to Carlos Lee.

I think on the only basis that Selig would be worth 14.5MM is that he’s able to keep George Steinbrenner and David Glass and the other owners civil.  That is, he’s the SuperDuper Nanny.

Yes, why would anyone think that the owners would be any more rational in choosing and paying a “CEO” than they are in determining player salaries, choosing GM’s and managers, etc.?  Most owners are not capable ("capable" is probably the wrong word) of understanding how to optimally run a baseball team.  Not even close.  Most won’t even pay a sabermetrician more than $50,000 a year (or nothing at all) who could save them or make them millions at the drop of a hat.  I think you (Rally) give them WAY too much credit than they deserve. I don’t think that anyone deserves credit unless we have direct evidence that indicates that they are in fact deserving of that credit.  We (at least fans, the media, and baseball people themselves do) do that far too much in baseball - giving managers and GM’s “credit” when the team is successful or not, whether or not they actually did something significant to cause that success or lack of, which they may or may not have…

I am far from a Selig apologist (as a Brewer fan, I suffered though the effects of his idiocy for years) but some of the criticism heaped on him just seems unjust.  That silly All Star game incident and the “travesty” of inter league play come to mind.  I’m surprised either was even brought up in this thread.

And no, his “skills” are not even close to worth what he’s being paid but we all know why his salary is as high as it is.  He’s a former owner and as the commissioner, has the current owner’s best interests in mind.  The owners might tell you that he’s worth every penny he’s being paid.

The All-Star decision was clearly no big deal.  However, that and his excitement over giving the HFA to the winner of the ASG was to me just an example of a less-than-brilliant mind.  As I said, if someone makes 14.5 mil a year to run a company, he better be damn brilliant.

And I certainly did not call inter-league play a “travesty.” I am not sure whether it is good or bad for baseball and there is sometimes a conflict between what is “good” for the sport in a pure and traditional sense and what makes them more money.  In the case of inter-league play, I am not sure whether it does make the teams/league more money or not.  In either case, it is an example of Selig not even being capable of figuring out if it does or not, something which I would think a second year economy student could do.  Anyway, what is a travesty, is what you state in your last paragraph, which is that his skills and probably his performance are not nearly worth the money he is paid, which is probably true of more than half (maybe 95%, I don’t know) the corporations in America and probably the world.  Then again, it is hard to put a dollar value of what someone or some thing is worth other than the classic supply and demand definition; however that is not the issue here.  The issue is what Selig would get from some other corporation on the open market or what MBL would have to pay someone else with the same skills (which is essentially the same thing).